Effects of Industry Concentration on Quality Choices for Network Connectivity

28 Pages Posted: 15 Nov 2004 Last revised: 19 Feb 2015

See all articles by Mark A Jamison

Mark A Jamison

University of Florida - Warrington College of Business Administration, Public Utility Research Center

Date Written: 2004

Abstract

I examine the effects of market concentration on connectivity in network industries. Using Cournot interactions for a duopoly, each network chooses quantity, quality for communications within the provider's own network (internal quality), and quality for communications between the provider's network and other networks (external quality). I find that large networks choose higher internal quality than do small networks and large networks choose higher internal quality than external quality. I also find that providers prefer flexible technologies that allow them to simultaneously choose outputs and qualities. Small networks prefer higher external quality than internal quality except when they make credible quality commitments before choosing output and have higher marginal operating costs than large networks. Networks choose identical external quality unless they have exogenously determined customer bases.

Keywords: networks, quality, telecommunications

Suggested Citation

Jamison, Mark A., Effects of Industry Concentration on Quality Choices for Network Connectivity (2004). Available at SSRN: https://ssrn.com/abstract=618746 or http://dx.doi.org/10.2139/ssrn.618746

Mark A. Jamison (Contact Author)

University of Florida - Warrington College of Business Administration, Public Utility Research Center ( email )

PO Box 117142
Gainesville, FL 32611
United States
352-392-6148 (Phone)
352-392-7796 (Fax)

HOME PAGE: http://warrington.ufl.edu/purc/facultyinfo.asp?WEBID=1217

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